[Federal Register Volume 59, Number 230 (Thursday, December 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 94-29574]
[[Page Unknown]]
[Federal Register: December 1, 1994]
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FEDERAL TRADE COMMISSION
[File No. 941 0123]
Alliant Techsystems Inc.; Proposed Consent Agreement With
Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
permit, among other things, Alliant Techsystems Inc. (Alliant), a
Minnesota-based defense contractor, to acquire Hercules Inc.'s
propellant division, Hercules Aerospace Company, under certain
conditions, and would require Alliant to prevent its newly acquired
propellant division from sharing non-public information with Alliant's
ammunition and munitions division. Alliant also would have to notify
its propellant customers of the Commission order before obtaining any
non-public information from them.
DATES: Comment must be received on or before January 30, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Laura Wilkinson, FTC/S-2224, Washington, DC 20580. (202) 326-2830.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the
Commission's rules of practice (16 CFR 2.34), notice is hereby given
that the following consent agreement containing a consent order to
cease and desist, having been filed with and accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of sixty (60) days. Public comment is invited. Such comments or
views will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR
4.9(b)(6)(ii)).
Agreement Containing Consent Order
The Federal Trade Commission (``the Commission''), having initiated
an investigation of the acquisition by Alliant Techsystems Inc.
(``Alliant''), of certain assets of the Hercules Aerospace Company of
Hercules Incorporated (``Hercules''), and it now appearing that
Alliant, hereinafter sometimes referred to as proposed respondent, is
wiling to enter into an agreement containing an order to refrain from
certain acts and to provide for other relief:
It is hereby agreed by and between proposed respondent, by its duly
authorized officers and attorneys, and counsel for the Commission that:
1. Proposed respondent Alliant is a corporation, organized,
existing, and doing business under and by virtue of the laws of the
State of Delaware, with its office and principal place of business
located at 600 Second Street, NE., Hopkins, Minnesota 55343.
2. Proposed respondent admits all the jurisdictional facts set
forth in the draft of complaint.
3. Proposed respondent waives:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
d. Any claim under the Equal Access to Justice Act.
4. Proposed respondent shall submit with this agreement an initial
report signed by the proposed respondent setting forth in precise
detail the manner in which the proposed respondent will comply with
Paragraphs II and III of the order when and if entered. Such report
will not become part of the public record unless and until the
accompanying agreement and order are accepted by the Commission. At the
time such report is submitted, proposed respondent may request
confidentiality for any portion thereof with a precise showing of
justification therefor.
5. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify proposed respondent, in which event it
will take such action as it may consider appropriate, or issue and
serve its complaint (in such form as the circumstances may require) and
decision, in disposition of the proceeding.
6. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondent that the law has been
violated as alleged in the draft of complaint, or that the facts as
alleged in the draft complaint, other than jurisdictional facts, are
true.
7. This agreement contemplates that, if it is accepted by the
Commission, if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the
Commission's Rules, the Commission may, without further notice to
proposed respondent, (1) issue its complaint corresponding in form and
substance with the draft of complaint and its decision containing the
following order to refrain from certain acts in disposition of the
proceeding, and (2) make information public with respect thereto. When
so entered, the order shall have the same force and effect and may be
altered, modified, or set aside in the same manner and within the same
time provided by statute for other orders. The order shall become final
upon service. Delivery by the U.S. Postal Service of the complaint and
decision containing the agreed-to order to proposed respondent's
address as stated in this agreement shall constitute service. Proposed
respondent waives any right it may have to any other manner of service.
The complaint may be used in construing the terms of the order, and no
agreement, understanding, representation or interpretation not
contained in the order or the agreement may be used to vary or
contradict the terms of the order.
8. Proposed respondent has read the draft of complaint and order
contemplated hereby. Proposed respondent understands that once the
order has been issued, it will be required to file one or more
compliance reports showing that it has fully complied with the order.
Proposed respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of the order
after it becomes final.
Order
I
It is ordered that, as used in this order, the following
definitions shall apply:
A. ``Alliant'' or ``Respondent'' means Alliant Techsystems Inc.,
its predecessors, subsidiaries, divisions, groups and affiliates
controlled by Alliant, and their respective directors, officers,
employees, agents and representatives, and their respective successors
and assigns.
B. ``Defense Systems'' means Alliant's Defense Systems Business
Group, an unincorporated division of Alliant with its principal place
of business at 600 Second Street, NE., Hopkins, Minnesota 55343, as
well as its officers, employees, agents, divisions, subsidiaries,
successors, and assigns, and the officers, employees or agents of
Defense System's divisions, subsidiaries, successors and assigns.
Defense Systems is principally engaged in the research, development,
manufacture and sale of Weapons and weapon systems.
C. ``Hercules'' means Hercules Incorporated, a corporation
organized, existing and doing business under the laws of Delaware with
its principal place of business at Hercules Plaza, Wilmington, Delaware
19894-0001.
D. ``Person'' means any natural person, corporate entity,
partnership, association, joint venture, government entity, trust or
other business or legal entity.
E. ``Commission'' means the Federal Trade Commission.
F. ``Propellant or Explosives'' means substances used to propel or
activate Weapons.
G. ``Weapons'' means ammunition and munitions.
H. ``Acquisition'' means the acquisition by Alliant of
substantially all of the assets and stock relating to Hercules
Aerospace Company, an unincorporated division of Hercules.
I. ``Non-Public Information'' means any information not in the
public domain furnished by a Weapons developer, manufacturer or systems
contractor to Alliant in Alliant's capacity as a provider of Propellant
or Explosives; provided (a) if written information is furnished, it is
designated in writing by the Weapons developer, manufacturer or systems
contractor as proprietary information by an appropriate legend,
marking, stamp, or positive written identification on the face thereof,
or (b) if oral, visual or other information is furnished, it is
identified as proprietary information in writing by the Weapons
developer, manufacturer or systems contractor prior to the disclosure
to Alliant or within thirty (30) days after such disclosure. Non-Public
Information shall not include (i) information already known to Alliant,
(ii) information which subsequently falls within the public domain
through no violation of this Order by Alliant, (iii) information which
subsequently becomes known to Alliant from a third party not in breach
of a confidential disclosure agreement with a Weapons developer,
manufacturer or systems contractor, or (iv) information after six (6)
years from the date of disclosure to Alliant or such other period as
agreed to in writing by Alliant and the Weapons developer, manufacturer
or systems contractor.
II
It is further ordered that:
A. Alliant shall not, absent the prior written consent of the
proprietor of Non-Public Information, provide, disclose, or otherwise
make available to Defense Systems any Non-Public Information; and
B. Alliant shall use any Non-Public Information it obtains only in
its capacity as a provider of Propellant or Explosives, absent the
prior written consent of the proprietor of Non-Public Information.
III
It is further ordered that Alliant shall deliver a copy of this
order to any United States Weapons developer, manufacturer or systems
contractor prior to first obtaining any Non-Public Information relating
to the developer's, manufacturer's or systems contractor's Weapons
either from the Weapons developer, manufacturer, or systems contractor
or through the Acquisition; provided that for Non-Public Information
described in Paragraph I. Section I.(b) of this order, Alliant shall
deliver a copy of this order within ten (10) days of the written
identification by the Weapons developer, manufacturer or systems
contractor.
IV
It is further ordered that:
A. Within sixty (60) days after the date this order becomes final,
Respondent shall submit to the Commission a verified written report
setting forth in detail the manner and form in which it intends to
comply, is complying, and has complied with Paragraphs II and III of
this order; and
B. One (1) year from the date this order becomes final, annually
for the next nine (9) years on the anniversary of the date this order
becomes final, and at such other times as the Commission may require,
Respondent shall file a verified written report with the Commission
setting forth in detail the manner and form in which it has complied
and is complying with this order. To the extent not prohibited by
United States Government national security requirements, Respondent
shall include in its reports information sufficient to identify all
United States Weapons developers, manufacturers or systems contractors
with whom Respondent has entered an agreement for the research,
development, manufacture or sale of Propellant or Explosives.
V
It is further ordered that Respondent shall notify the Commission
at least thirty days prior to any proposed change in Respondent, such
as dissolution, assignment or sale resulting in the emergence of a
successor corporation, the creation or dissolution of subsidiaries or
any other change in Respondent, that may affect compliance obligations
arising out of this order.
VI
It is further ordered that, for the purpose of determining or
securing compliance with this order, and subject to any legally
recognized privilege and applicable United States Government security
requirements, upon written request, and on reasonable notice,
Respondent shall permit any duly authorized representative of the
Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under
the control of Respondent relating to any matters contained in this
order; and
B. Upon five (5) days' notice to Respondent and without restraint
or interference from it, to interview officers, directors, or employees
of Respondent, who may have counsel present, regarding such matters.
VII
It is further ordered that, this order shall terminate twenty (20)
years from the date this order becomes final.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted an
agreement to a proposed Consent Order from Alliant Techsystems Inc.
(``Alliant''), under which Alliant's ammunition and munitions divisions
would be prohibited from gaining access to any non-public information
from competing ammunition and munitions producers that Alliant receives
in its capacity as a provider of propellant.
The proposed Consent Order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
Order.
Alliant is a significant competitor in the market for ammunition
and munitions. Alliant proposes to acquire Hercules Incorporated's
aerospace division, the only United States supplier of propellant used
in large caliber ammunition. The proposed complaint alleges that the
acquisition, if consummated, would violate section 5 of the Federal
Trade Commission Act, as amended, 15 U.S.C. 45, and section 7 of the
Clayton Act, as amended, 15 U.S.C. 18, because Alliant's ammunition and
munitions divisions could gain access to competitively significant and
non-public information concerning other ammunition and munitions
suppliers' products due to Alliant's role as a supplier of propellant.
As a result, the proposed acquisition increases the likelihood that
competition between ammunition and munitions suppliers would decrease
and that advancements in ammunition and munitions research, innovation,
and quality would be reduced.
The proposed Consent Order prohibits Alliant from disclosing any
non-public information Alliant receives in its capacity as a provider
of propellant from an ammunition or munitions manufacturer to Alliant's
ammunition or munitions divisions. Under the proposed Order, Alliant
may only use such information in its capacity as a provider of
propellant. Non-public information is defined in the Order as any
information not in the public domain furnished by an ammunition or
munitions manufacturer to Alliant's propellant division and designated
as proprietary information.
The Commission anticipates that the effect of the proposed Order
will be to maintain the opportunity for full competition in the market
for the research, development, manufacture and sale of ammunition and
munitions by limiting the ability of one significant competitor to use
information obtained from other competitors.
Under the provisions of the Consent Order, Alliant is also required
to deliver a copy of the Order to any United States propellant
customers prior to obtaining any information from them that is outside
the public domain. One year from the date the Order becomes final and
annually thereafter for nine (9) years, Alliant will be required to
provide to the Commission a report of its compliance with the Order.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and it is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify in any
way their terms.
Benjamin I. Berman,
Acting Secretary.
Concurring Statement of Commissioner Mary L. Azcuenaga
In Alliant Techsystems Inc., File No. 941-0123
Today, the Commission accepts for public comment a consent
agreement that resolves allegations that the acquisition of the stock
and assets of Hercules Aerospace Company, an unincorporated division of
Hercules Incorporated, by Alliant Techsystems Inc. may substantially
lessen competition in the research, development, manufacture and sale
of propellant, explosives or weapons. I concur in the finding of reason
to believe the law has been violated, but write separately to add two
observations about the remedy.
First, the consent order omits the ten-year prior approval
provision that the Commission usually imposes in cases brought under
Section 7 of the Clayton Act. My vote in favor of accepting the consent
order despite this omission is based on the highly unusual facts of
this case. I continue to believe that prior approval requirements
should be standard in section 7 cases.
Second, the order prohibits Alliant from misusing or appropriating
nonpublic information obtained from a competitor in the development of
weapons. Although we have had few similar cases, recently the
Commission imposed a similar remedy in Martin Marietta Corp., Dkt. No.
3500 (June 22, 1994). I joined in that decision and again do so here.
Nonetheless, I question the extent to which this provision of the order
adds to the protection afforded by private contracts to respect
confidentiality and the extent to which the Commission can effectively
monitor compliance with this requirement. Enforcement experience and
further analysis may well suggest a need for different, more effective
remedies.
[FR Doc. 94-29574 Filed 11-30-94; 8:45 am]
BILLING CODE 6750-01-M